Research in Motion Ltd (BBRY) BB10 Gross Margins of 27%: Wells Fargo

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Research in Motion Ltd (BBRY) BB10 Gross Margins of 27%: Wells Fargo

Research in Motion Ltd (NASDAQ:BBRY) (TSE:BB) adds decorated industry veterans to Board of Directors. Late last week, BBRY announced the addition of Richard “Dick” Lynch and Bert Nordberg to its Board, bringing total directors to 12 (10 of which are independent). Mr. Lynch and Mr. Nordberg are highly accomplished industry veterans who bring careers worth of relevant wireless experience (and notable accolades) to Research in Motion Ltd (NASDAQ:BBRY) (TSE:BB) from which the Board and company can leverage.

In particular, Mr. Lynch was the Executive Vice President of Verizon Communications and Mr. Nordberg was CEO of Sony Ericsson Mobile Communications. Many believe that BlackBerry is making the right moves to assure that it comes out of the gates strong and these additions to the Board, support that commitment.

According to various news outlets (Mashable, Global News), the U.S. launch of the Q10, originally slated for April, may be delayed until 8-10 weeks following the Z10 launch (currently estimated for March). If the reports are correct and the Z10 launches on schedule, this would imply a May or June Q10 launch. To some extent, the market may not be overly surprised by the timing as there were initial views at the launch event that it would ship in May/June.

On a related note, analysts at Wells Fargo Securities put out a new research report on Blackberry. They state that they believe a key determinant of valuation for BlackBerry will be its ability to drive increased gross margins on the back of BlackBerry 10. Prior to BlackBerry 10, they estimate BlackBerry was generating a gross profit loss on its hardware devices sales.

However, they estimate that Research in Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s BlackBerry 10 devices will have a gross margin of around 27%. Their assumption is based on the analysis of other companies that have launched new products at similar price points – namely Motorola and Palm.

In fact, both Palm and Motorola had higher gross margins than what they are forecasting for BlackBerry. However, the analysts are estimating a lower gross margin on the view that the company will be aggressive with co-marketing, some of which will be an above-the-line item that impacts gross margin.

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